Bandhan Bank founder Chandra Shekhar Ghosh publicly stated misselling by banks stems from employee sales targets, arguing banking is a "customer service business," not a targets business [1].
Comes days after Finance Minister Nirmala Sitharaman asked banks to stop misselling, linking consumer protection to the Viksit Bharat banking reform agenda [1][2].
Tests UPSC aspirants on banking regulation, consumer protection, financial inclusion, and institutional reform of the Banking Regulation Act, 1949.
Relevant for GS-III (Indian Economy — banking) and GS-IV (governance ethics — corporate accountability).
2. Why in the News
Interview published in The Hindu BusinessLine, dated 28 February 2026, in which Ghosh called for immediate cessation of misselling practices [1].
Statement followed FM Sitharaman's directive to banks to curb misselling of third-party products (insurance, mutual funds) [1].
Union Budget 2026-27 proposed a High-Level Committee on Banking for Viksit Bharat to comprehensively review the banking sector, covering financial stability, inclusion, and consumer protection [2].
3. Background & Evolution
Bandhan Bank commenced operations as a universal bank in 2015, evolving from Bandhan Financial Services, a microfinance institution.
Ghosh stated the bank did not sell insurance or mutual fund products for its first 5 years, introducing them only after customer demand [1].
FM Sitharaman has periodically chaired review meetings with MDs/CEOs of Public Sector Banks (PSBs) on operational performance, cybersecurity, and service quality [3].
Budget 2026-27 marks the latest institutional step — proposing a dedicated high-level panel on banking sector reform under the Viksit Bharat @2047 vision [2].
4. Core Static Facts
Aspect
Detail
Key entity
Bandhan Bank / Bandhan Group
Speaker
Chandra Shekhar Ghosh, Group Chairman, former MD & CEO, Bandhan Bank [1]
High-Level Committee on Banking for Viksit Bharat, proposed in Budget 2026-27 [2]
Regulator
Reserve Bank of India (RBI)
Governing statute
Banking Regulation Act, 1949
Redressal mechanism cited
Bandhan Bank's internal policy: refund of misselling proceeds within 24 hours; staff termination for non-compliance [1]
Ministry oversight
Department of Financial Services (DFS), Ministry of Finance [3]
5. Multi-Dimensional Analysis
Economic: Misselling erodes trust in formal banking, risking reversal of financial inclusion gains and increasing NPA/complaint burden on the sector.
Social: Vulnerable and first-time customers (rural, low-income) are most exposed to misselling of insurance/mutual fund products bundled with loans.
Legal/Constitutional: Consumer protection in banking currently relies on RBI's Banking Ombudsman Scheme and internal codes rather than a dedicated statutory misselling provision — Ghosh's call implies a Banking Regulation Act rejig is needed [1].
Ethical/Governance: Raises questions of incentive design — target-driven KPIs for bank staff conflict with fiduciary duty to customers; highlights need for internal vigilance and branch-level supervision [1].
Administrative: Implementation gap between RBI/FM directives and on-ground staff incentive structures at both private and public sector banks.
6. Recent Developments (last 12-18 months)
28 February 2026: Ghosh's interview in The Hindu BusinessLine calling for an end to misselling and a Banking Regulation Act rejig [1].
Budget 2026-27 (February 2026): FM Sitharaman proposed a High-Level Committee on Banking for Viksit Bharat; Ghosh welcomed it as a "key step" [2].
FM Sitharaman continued periodic review meetings with PSB and RRB leadership on operational and cybersecurity preparedness [3].
7. Prelims Hooks
Chandra Shekhar Ghosh is the founder and Group Chairman of Bandhan Bank, a former microfinance institution turned universal bank [1].
Bandhan Bank avoided selling insurance/mutual fund products for its first five years of banking operations [1].
The interview citing "misselling must stop" appeared in The Hindu BusinessLine, 28 February 2026 print edition [1].
Union Budget 2026-27 proposed a High-Level Committee on Banking for Viksit Bharat[2].
Ghosh called this committee "a key step" toward aligning banking with India's next growth phase [2].
Finance Minister overseeing banking sector reform: Nirmala Sitharaman[1][2].
FM Sitharaman has separately chaired reviews of Regional Rural Banks (RRBs) performance across states including Gujarat, Maharashtra, MP, Chhattisgarh, Rajasthan [3].
Regulatory body for banking misselling complaints: RBI, via the Banking Ombudsman mechanism.
Statute governing banking regulation in India: Banking Regulation Act, 1949.
Bandhan Bank's internal misselling remedy: refund within 24 hours, termination for repeat staff non-compliance [1].
8. Mains Relevance
GS-II: Governance — Government policies and interventions for development in the financial sector; Statutory bodies and regulatory mechanisms (RBI, DFS).
GS-III: Indian Economy — Banking sector reforms, financial inclusion, mobilization of resources, NPAs.
GS-IV: Ethics in governance — conflict between corporate targets and public/consumer trust; accountability in public/private banking.
Possible Mains question stems:
"Discuss how target-driven incentive structures in Indian banks conflict with consumer protection objectives. Suggest institutional reforms." (GS-III)
"Examine the need for amending the Banking Regulation Act, 1949 in light of recurring misselling and fraud incidents in Indian banks." (GS-II)
"'Banking is a service, not a targets business' — Critically analyse this statement in the context of ethical governance in India's financial sector." (GS-IV)
NPA crisis and banking sector reforms (2015-19) — precedent for regulatory tightening.
Insurance Regulatory and Development Authority of India (IRDAI) bancassurance guidelines — cross-selling regulation overlap.
Corporate governance in private banks — recent RBI actions on private bank frauds/vigilance.
10. Common Errors / Trap Areas
Do not confuse Bandhan Bank (universal bank since 2015) with its predecessor Bandhan Financial Services (an NBFC-MFI) — they are legally distinct entities pre/post banking license.
Do not attribute the High-Level Committee on Banking for Viksit Bharat to RBI — it was proposed by the Finance Ministry in the Union Budget [2].
Misselling regulation falls under RBI/Banking Regulation Act, not SEBI — confusing this with mutual fund/securities misselling (SEBI's domain) is a common trap, even though bank-sold mutual fund products intersect both regulators.
Ghosh's designation is Group Chairman, not current MD & CEO of Bandhan Bank — he is the former MD & CEO [1].